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Income Tax · New ActWhat happens to pending income-tax assessments after April 2026?
The Income-tax Act, 1961 was repealed on 1 April 2026 – but thousands of scrutiny cases, reassessments and appeals are still running. Here is how the savings clause keeps them alive, which law and time limits apply, and what to quote in your replies.
A new tax law does not wipe the slate clean. When the Income-tax Act, 2025 came into force on 1 April 2026, the 1961 Act was repealed – but Section 536 of the new Act (repeal and savings) preserves everything done or pending under the old law. For taxpayers with open cases, the practical rule is simple: the year decides the law.
The basic rule
- Income of FY 2025-26 and earlier (AY 2026-27 and earlier) is assessed under the 1961 Act.
- Income of Tax Year 2026-27 onwards is assessed under the 2025 Act.
- Proceedings already started continue as if the old Act had not been repealed.
- Notifications, circulars, approvals and registrations under the old Act continue to the extent they are not inconsistent with the new Act.
What is saved
| Proceeding | Continues under | Notes |
|---|---|---|
| Processing of returns for AY 2026-27 and earlier | 1961 Act, Section 143(1) | Intimations still cite 143(1) |
| Scrutiny assessments | 1961 Act, Sections 143(2)/143(3)/144B | Faceless procedure continues |
| Reassessment | 1961 Act, Sections 147–148A | Time limits of the old Act apply |
| Rectification | 1961 Act, Section 154 | Within the old time limits |
| Penalty proceedings | 1961 Act, Sections 270A, 271 etc. | Including pending show cause notices |
| Appeals before CIT(A), ITAT, High Court | Old provisions for that year | Filed on the same portal |
| Refunds and interest | 1961 Act, Sections 244A, 245 | Adjustments against old demands continue |
| Registrations and approvals | Saved | 12A/12AB, 80G, lower deduction certificates already issued |
Time limits still running
Because the old provisions are saved, their time limits continue to matter in 2026 and 2027. A few frequently met ones (as they stood in the 1961 Act):
- Scrutiny notice under Section 143(2): within three months from the end of the financial year in which the return was filed.
- Assessment order: generally 12 months from the end of the assessment year (shorter periods for later years as amended).
- Reassessment notice under Section 148: three years from the end of the relevant AY, extended up to five years where escaped income is ₹50 lakh or more, subject to the procedure under Section 148A.
- Rectification under Section 154: four years from the end of the financial year in which the order was passed.
- First appeal: 30 days from the order or demand notice.
Always verify the exact limit for your year, as these were amended several times.
Worked example
Example: Mr Arora, a trader in Narela, filed his return for AY 2024-25 in October 2024. He receives the following:
| Date | Communication | Law applicable |
|---|---|---|
| June 2025 | Notice under Section 143(2) for AY 2024-25 | 1961 Act |
| February 2026 | Show cause on proposed additions | 1961 Act |
| August 2026 | Assessment order with demand of ₹3,40,000 | 1961 Act (saved by Section 536) |
| August 2026 | Demand notice under Section 156 | 1961 Act |
| September 2026 | Appeal to CIT(A) within 30 days | Appeal provisions for that year |
His replies, appeal grounds and stay application should cite the 1961 Act sections – not Sections 270 or 289 of the 2025 Act. At the same time, his advance tax for Tax Year 2026-27, paid in September 2026, is under the new Act.
Appeals and pre-deposit
Budget 2026 reduced the pre-deposit for staying a demand pending first appeal from 20% to 10% of the core tax demand, as reported. Where you have an old-year demand, ask for stay on the revised terms and keep proof of the appeal filing. Disputed demands should never simply be ignored – the system will adjust refunds against them under Section 245.
What to do if you have an open case
- Make a list of all open proceedings with year, section, last communication and next date.
- Check the "Pending actions" and "e-Proceedings" tabs on the e-filing portal at least weekly.
- Draft replies citing the correct Act and section for that year.
- Track limitation: an order passed after the time limit may be challenged as time-barred.
- Keep the response trail – acknowledgements, uploaded documents and adjournment requests.
Common mistakes
- Citing new-Act sections in a reply for an old year, which can confuse the record.
- Assuming a case "lapsed" with the repeal.
- Missing a hearing because notices now arrive alongside new-Act communications.
- Letting a refund for a later year be adjusted against an old demand that is under appeal and stayed – object to the Section 245 intimation online.
Key takeaway
Old cases run on old law. Treat each year separately, cite the Act that governs that year, and track the old time limits closely. If you have received a notice, see our guide to income-tax notices or use the Tax Notice Navigator.
Official references
Provisions discussed (summaries in our Law Library):
- Income-tax Act, 2025 – Section 279–281 (corresponds to 147 / 148 / 148A): Income escaping assessment
- Income-tax Act, 1961 – Section 147 / 148 / 148A (corresponds to 279–281): Income escaping assessment
Official sources to verify the current text, notifications and circulars:
Frequently asked questions
Are pending scrutiny assessments cancelled because the 1961 Act was repealed?
No. Section 536 of the Income-tax Act, 2025 saves proceedings under the 1961 Act. Pending assessments, reassessments, appeals and penalties continue and are completed under the old law.
Can a reassessment notice for AY 2022-23 be issued after April 2026?
Yes, if it is within the time limits of the 1961 Act provisions as saved. The notice will refer to Sections 148A/148 of the 1961 Act, not the new Act.
Under which Act do I file an appeal against an order for AY 2024-25 passed in 2026?
The appeal procedure follows the savings provisions; in practice the order and appeal refer to the 1961 Act for that year, and the appeal is filed online on the e-filing portal in the prescribed form.
Will my old refund be lost?
No. Refunds and interest for earlier years continue to be processed under the 1961 Act provisions.
Will the faceless assessment scheme continue for old cases?
Yes. Pending assessments, appeals and penalty proceedings for earlier years continue through the existing faceless procedures and the e-filing portal, under the saved provisions of the 1961 Act.
Can I still file a rectification for AY 2023-24?
Yes, within the time limit applicable under the 1961 Act – generally four years from the end of the financial year in which the order sought to be rectified was passed.
Do old demands get adjusted against new refunds?
Yes. Refunds of later years can be adjusted against outstanding demands of earlier years after an intimation. Object online if the demand is under appeal and stayed, or already paid.
This article is general information on the law as on 10 November 2026, written for educational purposes. It is not professional advice for your case. Section numbers under the Income-tax Act, 2025 should be confirmed with the official section mapping on the Income Tax Department website before use in filings.
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